‘Supporting people in their 50s to stay in work for longer should be a priority’ says analyst
People retiring between the ages of 50 and 64, the state pension age, could cost the pension economy £88bn, the ONS has said.
While if the employment rate among 50 to 64-year-olds was similar to those aged 35 to 49 years, it could add 5% to GDP or £88bn.
Tom Selby, head of retirement policy at AJ Bell said the early exit of people aged between 50 and state pension age from the workforce has a significant impact on both individual retirement plans and the wider economy.
Not everyone who stops working early does so voluntarily. In many cases it can be down to issues such as ill-health.
“Worryingly, although perhaps not surprisingly, people who work in low-paying or physically intensive sectors are six times more likely to stop working before state pension age because of ill-health than those working in other professions,” said Selby.
Also, women are much more likely to be economically inactive before state pension age than men.
- At age 50, 17.9% of women were economically inactive compared with 9.6% of men, while at age 64, 58.6% of women were economically inactive compared to 44.9% of men.
This has the potential to potential of “perpetuating the gap in pensions between the sexes”, according to Selby.
“Stopping working in your 50s – when in theory your earning power and ability to save should be at its highest – could also have a significant impact people’s retirement outcomes.”
In a number of cases it could mean making your retirement funds stretch for longer, meaning there is to spend for one’s later years.
“It also potentially impacts on people’s health and wellbeing. For all those reasons, supporting people in their 50s to stay in work for longer should be an absolute priority for policymakers,” says Selby.
